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April 9, 1999

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Subject: Re: WHO LOVES AOL?
Author: Hidude

Yes AOL is earning money. An estimated 8 cents per share. I hope your completely comfortable paying 170 bucks per share for those whopping 8 cents. Look, I'm not disputing that AOL isnt a great company, but lets get somewhat rational

I am going to delurk here and admit I love AOL, dearly. Mr. Kelly, I do have something wrong with your WHOPPING 8 cents that AOL is earning per share. Their trailing twelve months earnings is almost .23 cents. About 200% above your figure. If you are looking at the earnings estimate for Full Year 99, the estimate predicted by the Wise is 35 cents, which I don't put much weight into (yet again proven by their attempt to figure out Yahoo's earnings last night).

I have owned this stock for only six months. I am not going to point to it and say "Look it went up, thus I am right." I will point to the company and "Look at AOL, the company, thus I am right about the company."

There are many things I love about this company. First of all they have 19 MILLION people sending them an average of $19.50 to use AOL's proprietary offerings. Then on top of that they have over $5 worth of advertising revenue coming in per person, and growing.

" There are many things I love about this company. First of all they have 19 MILLION people sending them an average of $19.50 to use AOL's proprietary offerings. Then on top of that they have over $5 worth of advertising revenue coming in per person, and growing."

Just sit back and think in five years of how many people are going to be using AOL and rely on it for many things (i.e. newspaper, interaction, and other entertainment.) I know that they will have well over 100 MILLION people using their services worldwide. This is just the AOL service. BTW there is so much more to this company.

I am rather impressed by what they are doing with their recent acquisition, Netscape. That is a lot of potential revenue coming from the e-commerce softwre side of that relationship to AOL.

AOL hasn't stopped here in gaining a presence on the internet. They also have two of the most highly trafficed websites, in AOL.com and Netcenter. Then through on their other properties Digital cities (profitable in January, last I recall)and ICQ.com.

Aside from all of this, I feel that of the real big parts of this company is ICQ. This is the only product that I personally use of theirs. Their are over 30 million people in a totally different demographic group that hasnt been targeted yet for e-commerce or for advertising. I like what they are doing with this. If one should recall that they did sign an agreement with Ebay a couple of weeks ago that will also allow Ebay access to this demographic group. I feel that these demographic groups are very similar. This is just one of the many potential e-commerce/advertising initiatives that they can use here. They are doing an excellent job of not upsetting this young, hip crowd that is drawn to ICQ for the very fact that it isn't commercialized.

In the future, ICQ will provide many oppurtunities for AOL, including the fact that the panel can sit on the screen for hours on end, thus providing eyeballs for advertisers. Advertising in the future will not look like any kind of advertising it does now. It will be a lot more useful as well as less intrusive meaning ads may not look like ads.

"I also feel that their margins will only continue to grow as their advertising and e-commerce related revenues increase. I think I may hang onto my dear AOL for quite awhile."

When I bought my little stake in this company, I bought the future CASH FLOW, not necessarily the earnings. I seem to recall that they are sitting on close to $2 billion. This is rather impressive, and I feel will get more impressive in the future.

I also feel that their margins will only continue to grow as their advertising and e-commerce related revenues increase. I think I may hang onto my dear AOL for quite awhile.

AOL has a portfolio of stocks for itself. They already own 5% of Sportsline, about 12% of I-Villiage, almost 2 and a half million shares and warrants of recent IPO critical path, and probably a couple other stakes in companies.

It may even split again soon and then begin another upward climb,

The split is a non event, even if it actually occus. I could care less. I personally am envious of Berkshire Hathaway and the stock price they have.

Hmmm... is this way to much way to fast?

Heck no. This is only the start of it. Lets look at AOL in five years, I would even wager to go one year in the future. What I am trying to do is simply beat the S and P average. I feel I have increased my chances greatly by purchasing a little bit of this company. And yes, I am comfortable paying $170 for a part of this company, or $200 if that were the price the market was charging at that moment to get into this awesome company. Only if I could scrape up a couple more dollars.

Sorry this is so long, but this helps me to get all of my thoughts written out.
Dude